As the budget season approaches, anticipation grows over how the government will balance growth ambitions and fiscal responsibility. A key focus could be reconfiguration of the tax regime introduced in 2020 to simplify tax compliance and reduce reliance on exemptions and deductions.
A press note issued last August showed that 72% of taxpayers who filed returns by 31 July chose the new tax regime, up from 67% in FY23. While it is heartening to see a majority of taxpayers moving to the new regime, there's been only a marginal increase of 5 percentage points in FY24 from a year ago.
While the simplified filing process and lower tax rates are appealing, 28% taxpayers still preferred the old regime due to deductions and exemptions (Public Provident Fund, National Pension System, house rent allowance, leave travel allowance, and housing loan interest allowance).
This contrast highlights the differing benefits of the two regimes. The new tax regime appeals to those with straightforward finances, while the old tax regime suits individuals leveraging deductions and exemptions for optimised tax payouts.
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Denne historien er fra January 07, 2025-utgaven av Mint Chennai.
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